Chapters of the article
How is the foreclosure process?
Each execution is preceded by standard acts where the court, upon the creditor’s (beneficiary’s) motion, authorises a bailiff to execute the execution. The bailiff then begins to seize the property and subsequently sends the debtor a notice of the commencement of the execution and a request for voluntary performance.
Similarly, the execution on an account is usually initiated by information to the bank first and only then is the debtor informed. This is for the simple reason that the debtor cannot access the account and withdraw the money himself before it is blocked. As a rule, he will find that he is suddenly not allowed to withdraw cash, pay by card or send money from his account, or will only have access to part of his funds. If the debtor has more than one account, the execution can be applied to all of them. If he or she is self-employed, the garnishment may apply to that account as well.
Tip: Naturally, none of us wants to get into foreclosure. The most prudent among us may find it risky to take out even a regular loan or hire purchase, while others use another loan to make ends meet and do not consider the possibility of over-indebtedness. So what is a reasonable rate and how do we go about avoiding foreclosure? And how do we defend ourselves if foreclosure occurs? This is the subject of our article.
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If there’s not enough money in the account..
If the execution is carried out for the amount of twenty thousand and the debtor’s account contains one hundred thousand, the situation is relatively easy. After the enforcement order becomes final, the amount is deducted from his account and sent to the bailiff. The execution may then be terminated. Such a step is always preceded, of course, by a call for voluntary payment of the debt within 30 days, which would seem to be the easiest option if the balance is sufficient.
If there are insufficient funds in the account, the funds will be blocked for a further six months. If a writ of execution is issued, the debtor loses virtually all disposition of the account. Therefore, he or she cannot use all or part of the funds already available in the account, including card payments, ATM cash withdrawals, placing payment orders and executing set standing orders and authorised direct debits.
Within this period, the bailiff may use other methods of enforcement, i.e. he may seize property and use its sale to pay the debt or request deductions from wages through the employer.
If the debtor does not dispute the substance of the execution, i.e. the amount owed or other circumstances, it is certainly worthwhile to cooperate and communicate with the bailiff. The longer the execution drags on, the more the debts (or the interest on them) increase.
Tip: Execution on the debtor’s income is one of the first options that bailiffs focus on. What income, other than wages or salary, can be affected? What is the minimum amount that will be left for the debtor and his family, and how is the process for multiple foreclosures? We have addressed this in our separate article.
What account dispositions are allowed?
During the execution period, you are entitled to a one-off withdrawal of three times the minimum subsistence level. In 2023, the minimum subsistence level is CZK 4,860, for a total of CZK 14,580. In order to withdraw this money, you must appear in person at a bank branch and submit an application. If everything is in order, the money will be paid. This can only be arranged in one case, even if you have multiple blocked accounts.
The initiation of execution and its conduct against the debtor does not restrict the debtor from opening another account with another bank. However, they must take into account that it is very likely that this account will also be subject to execution. Another solution is to open a protected account, which is described below.
What about other accounts within the family?
The basic rule is that the bailiff may only seize an account held in the name of the debtor, in the sense that it is not enough for him to be the mere disposer of the account, but he must be the owner.
Conversely, however, as regards the spouse’s account, execution can also be issued on his or her account if the debt was incurred during the marriage (but the debt did not necessarily have to be incurred by a legal act done jointly by the spouses, it is sufficient if the debtor himself or herself undertook the obligation). However, both spouses must be informed of this step by letter. If the debt owed arose before the marriage, the execution may be stopped. An application for a stay of execution may also be made if the matrimonial property is legally dissolved or limited.
Have you set up an account for your child and are you sending them an allowance? Your offspring can rest easy and not worry about their savings. The executor has no claim on the money in the child’s account because it is the sole property of the child. The child’s account can theoretically be blocked by the bailiff if the debtor is the child.
Payment of the debt and lifting of the block
Once you have paid the debt being recovered, including any additional costs, the execution should be terminated. You do not need to do anything special to get the account back into operation, as the bailiff should act alone.
However, you can submit a motion to stop the execution directly to the bailiff and he is obliged to decide on it within 15 days. If you disagree with his decision, he can file an appeal. The debtor’s spouse can also file a motion to stop the execution if the execution is also against his/her property or against property held in community of property.
Termination of execution in insolvency
If the situation is really unbearable, it can also be solved by declaring personal bankruptcy and applying for the commencement of insolvency proceedings (debt relief). This procedure also leads to the termination of the execution, since once the debt relief has been approved, the debtor’s property can no longer be subject to execution.
The institution of a protected account
From 2021, persons under execution can set up a so-called protected account, which can be disposed of in a similar way to the existing account and cannot be accessed by the executor. They can continue to make cashless payments and bank transactions. On the other hand, it cannot be used to take out credit or use other similar services. However, it can only be used to manage so-called protected income.
No one other than approved payers of protected income can send money here, or such money would be rejected by the bank.
The list of protected income is long. They include wages, salary, remuneration from outside employment, pension, maintenance, business debts, social assistance benefits and many others. However, it cannot be understood that the debtor will be left with, for example, a 50,000 salary. It is the amount of the so-called non-forfeitable minimum that determines how much of the wages will be left to the debtor and his family and how much will go to the creditors.